By Robert M. Cutler (11/30/2011 issue of the CACI Analyst)

Azerbaijan and Turkey have announced plans to construct a pipeline from the South Caucasus across Turkey to carry natural gas from Azerbaijan’s offshore Shah Deniz Two deposit to Southeastern Europe. At first glance, this would seem to leave Nabucco and two other candidate pipeline projects that have already submitted bids, out in the cold. However, what is involved is the creation of a format for bargaining where Azerbaijan can assert its strategic interests more convincingly against the pipeline consortia, which by their project-oriented nature have not been inclined to take a broader view.

By Richard Weitz (11/30/2011 issue of the CACI Analyst)

One reason why the Russian and Central Asian governments have become increasingly supportive of NATO’s mission in Afghanistan is their concern regarding the export of Afghan narcotics into and through their countries. These governments have become increasingly worried that NATO’s ongoing withdrawal of combat troops from Afghanistan will result in their having to confront the problem of narco-trafficking largely by themselves. Mutual concerns about Afghanistan are helping to drive Moscow and Washington to cooperate despite their persistent differences over other issues, but major disagreements over the U.

By Ramiz Rahmanov and Zaur Valiyev (11/30/2011 issue of the CACI Analyst)

With economic recovery, the governments of Armenia and Georgia managed to reduce budget and current account deficits; however, the gross government and external debts still remain to be significant.  To reduce the debt risks, their governments need to increase attractiveness of their economies for investments and boost exports. The other Caucasian republic, Azerbaijan, due to high oil revenues, does not experience any problem with balancing its budget and maintaining external sustainability.